Raytheon Technologies Q4 2025 Earnings Analysis

**Beta Finch Podcast Script: RTX Q4 2025 Earnings**---**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown where we decode corporate calls so you don't have to. I'm Alex.**JORDAN:** And I'm Jordan. Today we're diving into RTX's fourth quarter 2025 results - and wow, what a call this was.**ALEX:** Before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.**JORDAN:** Absolutely. Now Alex, RTX just delivered some seriously impressive numbers. Walk us through the highlights.**ALEX:** The numbers are pretty staggering, Jordan. Full year adjusted sales hit $88.6 billion - that's up $9 billion year-over-year, or 11% organic growth. But here's what really caught my eye: their backlog reached a record $268 billion. That's up 23% from last year.**JORDAN:** A quarter of a trillion dollars in backlog - that's just mind-boggling. And their free cash flow performance was equally impressive, right?**ALEX:** Exactly. Free cash flow came in at $7.9 billion for the year, up $3.4 billion from 2024. CEO Chris Calio seemed pretty confident about their momentum, pointing to what he called "durable demand" across both commercial and defense segments.**JORDAN:** Speaking of segments, let's break down where this growth is coming from. Commercial OE was up 10%, commercial aftermarket up 18%, and defense up 8%. But I think the real story here is what's happening with their defense business, especially given the current geopolitical environment.**ALEX:** That's a great point. Raytheon, their defense segment, had some massive contract wins. They booked $1.2 billion to supply Spain with Patriot air defense systems, another $1.2 billion for Tamir missile production, and get this - their international backlog mix is now 47%, up from 44% last year.**JORDAN:** And the timing couldn't be better. Calio mentioned that NATO allies are committed to increasing defense spending from 2% of GDP to 3.5% by 2035. That's a huge tailwind for companies like RTX.**ALEX:** But let's not forget about the elephant in the room - the GTF engine issues that have been plaguing Pratt & Whitney. How are they handling that?**JORDAN:** Actually, this was one of the more encouraging parts of the call. They reported that aircraft on ground - that's AOGs - declined in Q4 and are down over 20% from 2025 highs. Their maintenance and repair output was up 39% in the fourth quarter alone.**ALEX:** That's a significant improvement. And they're expecting similar MRO growth rates in 2026. Plus, they got EU certification for their GTF Advantage engine and expect aircraft certification soon.**JORDAN:** Now let's talk guidance, because this is where things get really interesting for 2026. They're projecting sales between $92-93 billion, which represents 5-6% organic growth.**ALEX:** And EPS guidance of $6.60 to $6.80 - that's solid growth on top of their $6.29 in 2025. But what really stood out to me was their free cash flow guidance of $8.25 to $8.75 billion. They're basically saying they can maintain this cash generation machine while investing heavily in capacity.**JORDAN:** Speaking of investments, they're planning to spend $10.5 billion in CapEx and R&D in 2026, including $3.1 billion in CapEx alone. That's a $500 million increase from last year. They're really betting big on future demand.**ALEX:** And then we got to the Q&A section, which was fascinating. There were some pointed questions about the new administration's defense policies and expectations for contractors.**JORDAN:** Right, CEO Calio was pretty diplomatic but direct. He acknowledged the "frustration" from the Department of Defense about production rates and said RTX is "fully aligned" with ramping production faster. But he also defended their dThis episode includes AI-generated content.